Abstract [en]

The current rental housing market in Stockholm is anything but functional. The supply of rental housing is low, which has resulted in long queues, an extensive black rental market and lock in effects. The ill-functioning rental market raises the question whether it is time to reform or abandon the current rental system, in favor of a new approach in the rental market where a new alternative rent setting model would be introduced. A model that hopefully reduces the negative effects we see on the rental market today.

The report sets out to describe the current rental system and outline potential rental models. Both current and potential models are all relatively well explained from a rental perspective, but none have been investigated from a market value perspective. Two of the investigated models involve a change toward market rents. Valuation simulations are performed to capture the potential market value change these models entail.

To make informed assumptions in the simulations, national and international data have been collected from IPD and Newsec, as well as knowledge from interviews. The collected data showed a proportionate relation of 0.5 to 1.5 percent difference in yield between residential and office markets around Europe, where the rental housing market to some extent is deregulated. The corresponding ratio in Stockholm is 2.0 to 3.0 percent.

Results from the simulations showed that an introduction to market rents do not result in a significant increase in the market value. Yields and operating - and maintenance costs is assumed to counteract the increased rent, making the value impact less significant. The greatest value impact is recorded in the existing stock where the amplitude between the outgoing rent and market rent is greatest.